Medical & General Financial Solutions Ltd

How psychology might affect your view of cash and safety

Published: April 7, 2026 by Jennifer Armstrong

How your brain works can affect how you view wealth and different assets. For many, this can mean cash feels like a safer option than alternatives, but it’s not always the right one. Indeed, sometimes choosing to hold cash could mean you miss growth opportunities.

3 reasons why cash might feel like the “safe” option

1. Cash can feel more tangible than alternatives

One of the benefits of cash is that you can withdraw the money and hold it. This makes it feel more tangible as an asset. Even when cash is held in an account, knowing that you can access it and it’s typically simple to manage online might mean it feels more comfortable than assets like bonds or stocks.

2. Cash is accessible when you need it

You can usually access cash when required. This means it can act as a valuable safety net and feel like the safe option as a result.

3. Cash can seem more stable than other assets

While the value of cash assets does change due to inflation, the effect is often gradual. When you compare this to market movements that may affect your investments, this stability might seem attractive.

These factors, as well as others, might lead people to choose cash over alternatives because it’s perceived as safer.

According to an article published by IFA Magazine (7 March 2026), cash is taking on a more prominent role in the portfolios of high-net-worth individuals. Indeed, 38% of this group say they hold more cash than they did three years ago, with cash accounting for around £1 for every £5 of their wealth.

Inflation could mean the value of your cash falls in real terms

The value of cash can feel static. After all, when you place a sum into an account, the figure doesn’t rise and fall as other assets might. However, inflation can erode the value of cash if the interest rate doesn’t keep up.

As the cost of goods and services rises, your cash will gradually buy less as its spending power is reduced. Over the short term you might not notice this, but it can have an impact over the long term.

According to the Bank of England’s inflation calculator, if you deposited £10,000 into a savings account in 2014, it would need to have grown to £13,390 by 2024 to have the same spending power. This is due to an average annual inflation rate of 2.96%.

So, while holding cash might feel safe and be appropriate in some circumstances, you could benefit from examining the alternatives.

When you might consider investing instead of cash

Investing might be an appropriate option when your goal is long term.

Over a long-term time frame, investments have the potential to deliver returns that are above interest rates. As a result, you may consider it if your goal is more than five years away. This is because the ups and downs of market movements typically smooth out over a long period.

However, it’s important to note that investment returns aren’t guaranteed. All investments carry some risk, and assessing what level of risk is appropriate for your circumstances and goals is an essential step when creating an investment strategy.

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If you’d like to discuss how to manage your wealth, including cash, as part of a wider financial plan, please get in touch.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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